Monetary reform in Russia 1993

The monetary reform of 1993 pursued the goal of taming inflation and exchanging the remaining banknotes of 1961-1992 for banknotes of a new type. The reform was confiscative in connection with the fact that a number of restrictions were established in the exchange of banknotes. In addition, the reform was carried out during the summer holidays, which created additional difficulties for citizens. In this regard, the Bank of Russia issued an clarification that the exchange of banknotes from October 1, 1993 is carried out exclusively upon presentation of documents confirming the impossibility of an exchange on time. This restriction was also aimed at combating the influx of ruble banknotes from the former Soviet republics, since the central banks of some former union republics have already begun issuing national currencies ^[1] . The issue by national banks since 1993 of national banknotes in the territory of the former union state began to threaten the Russian monetary unit with the fact that the old money supply could flood into the Russian Federation ^[2] . Only the Russian Central Bank could issue cash rubles, but at the same time, 14 independent state banks of the former Soviet republics were able to issue ruble loans, as well as print their own national currencies and their surrogates, which they did actively, increasing the size of the money supply of the Soviet ruble.

The official goals of the reform were announced to combat inflation, to retire Soviet-style paper money from circulation and to solve the problem of separating the monetary systems of Russia and other CIS countries that used the ruble as a means of payment in domestic money circulation. In fact, on July 17, 1993, Russia left the ruble zone of the CIS , the ruble virtually ceased to exist as a means of payment for the interconnected economy of the CIS on July 26, 1993, and the government of V. S. Chernomyrdin deprived Russia of the ability to control all cash emission and the economy of those dependent on it republics of the ruble zone. The non-cash ruble in settlements between the republics also ceased to exist.

In the Russian Federation, a decision was made to cease circulation of cash tickets of the State Bank of the USSR and the Bank of Russia of the 1961-1992 sample on the territory of the state and to use only banknotes of the 1993 model from September 26, 1993.

On July 5, 1993, a cable was issued by the Central Bank of the Russian Federation prohibiting the issuance of payment of state treasury tickets of the USSR and tickets of the USSR State Bank of the sample of 1961-1991 from payment offices from July 6 ^[3] . At the same time, the leadership of the Central Bank emphasized that this does not mean the abolition of these banknotes.

The terms of the monetary reform were set forth in the Telegram of the Central Bank of the Russian Federation N 131-93 dated July 24, 1993. The telegram was signed by the Chairman of the Central Bank of the RSFSR (Roscentrbank) Viktor Gerashchenko .

The Central Bank of the Russian Federation in accordance with the Law of the Russian Federation “On the Monetary System of the Russian Federation” and the Law of the RSFSR “On the Central Bank of the RSFSR” in order to eliminate multiple modifications of cash tickets of the same denomination in circulation and due to the sufficiency of Bank of Russia banknotes and coins in the reserves 1993 terminates from scratch hours (local time) July 26, 1993 circulation throughout the Russian Federation of state treasury tickets of the USSR, tickets of the State Bank of the USSR and Banknotes of the Bank of Russia of the 1961-1992 sample.

Initially, the exchange limit was set at 35 thousand rubles (at that time - about $ 35). Citizens of Russia (according to the registration in the passport) could exchange the indicated amounts for two weeks, from July 26 to August 7, at Sberbank of Russia institutions, which was stamped on the passport. Amounts exceeding 35,000 rubles were to be credited to term deposits for a period of 6 months.

The country began to panic. On July 26, Presidential Decree No. 1107 was issued, increasing the amount of banknotes accepted for exchange in the 1961-1992 sample to 100 thousand rubles. (about $ 100 equivalent) per person. Banknotes of 10,000 rubles of the 1992 model were exchanged without limiting the amount. The exchange period was extended until the end of August; during this period, the use of notes in circulation of 1, 3, 5 and 10 rubles was allowed ^[4] . On July 27, a Central Bank telegram was issued containing similar provisions ^[5] .

Subsequently, the exchange was extended until the end of the year, but it was clarified that from October 1, banknote exchange is possible only upon presentation of documents confirming the impossibility of exchange at an earlier date ^[6] . From November 16, an additional requirement was introduced to confirm receipt of money until July 26, and the exchange of banknotes in denominations of 5,000 and 10,000 rubles and the exchange of money to citizens of neighboring countries (except for refugees) were stopped ^[7] .

The period of use in circulation of notes in 1, 3, 5 and 10 rubles, extended initially until the end of August, was later also extended until December 31, 1993 ^[8] . On December 1, a special procedure was introduced for their use in circulation, which provided for a ban on all organizations, enterprises and institutions from issuing these notes from their cash desks for any purpose, including for delivery ^[9] .

Many people physically did not manage to exchange their cash savings, and this money was lost.

Enterprises could exchange cash within cash balances at the beginning of the day on July 26 and were required to deposit them with the bank on the banking day of July 26. The amount of money donated should not exceed the limit set for the cash desk of this organization, and the amount of trading revenue received at the cash desk at the end of the day on July 25 ^[10] .

Coins in rubles and kopecks formally remained legal tender until the 1998 monetary reform .

During the 1993 reform, 24 billion banknotes were seized. The reform has not strengthened the ruble. In fact, it led to serious complications with neighbors, as their currencies were pegged to the ruble. The central bank had to transfer part of the new banknotes to Kazakhstan and Belarus. In the second half of 1993, Russia tried to negotiate with its neighbors to create a new type of ruble zone, but only Belarus agreed to sign an agreement on the unification of monetary systems in the future ^[2] .

One of the results of the reform was the abandonment of the ruble and the formation of national currencies in the CIS countries (although for some time after the reform, the USSR rubles, which were no longer accepted in Russia, were actively used in the monetary circulation of the CIS countries).

The introduction of the new Russian ruble prevented the uncontrolled printing of old banknotes outside of Russia. According to the director of the HSE Banking Institute, Vasily Solodkov, after the collapse of the USSR, all the former union republics ^{[1] [11]} began independently and unlimitedly printing Soviet rubles, which in large quantities entered the Russian market and contributed to hyperinflation in Russia. The separation of national currencies allowed the Russian government to more effectively manage the money supply ^{[ specify ] [11]} .

“ We wanted the best, but it turned out as always ”
- a phrase made by Viktor Chernomyrdin , Prime Minister of the Russian Federation on August 6, 1993 at a press conference, telling how the 1993 monetary reform was being prepared.

• Economic Reforms in Russia (1990s)